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NEAR-TERM MARKET FUNDAMENTALS: Traders report that the higher dollar helped to pressure the wheat market overnight. This pressure spilled over into the KC and Minneapolis markets with Minneapolis being the leader to the downside after having led wheat higher on yesterday’s rally. Other news is light this morning, and so is demand. Japan is tendering for just 71,000 tonnes of wheat on this week’s tender, and traders are concerned that a higher dollar could quickly reduce the competitiveness of US wheat on the world market. Scattered rains could return to parts of the northern Plains starting Friday with increasing possibilities of rain into Sunday. Traders are concerned that the region may lose 1 million or more acres of spring wheat planted area as a result with some of the land getting planted to oilseeds instead. The USDA’s Export Sales Report will be delayed until tomorrow due to the Memorial Day holiday earlier this week.
CASH NEWS AND TENDERS: Jordan cancelled a tender today for 100,000 tonnes of wheat. Israel is tendering for 30,000 tonnes of wheat. Iraq and Jordan are tendering for wheat.
WEATHER: Rain is expected to hit eastern and southern Illinois and much of Indiana today, but possibly not Ohio as previously forecast and overall amounts may be less than previous forecasts. This should be followed by dry conditions across virtually the entire Midwest tomorrow and Saturday and possibly into Sunday. Illinois and the eastern and southern Midwest may then remain dry into Monday. Conditions become more mixed after that and the 6-10 calls for above normal rains in Illinois, Indiana, Missouri and much of the western corn and soybean belts. Dry weather is expected to continue today in the northern Plains and in the rest of the Plains as well. However scattered rains may start again in the north tomorrow and increase into Sunday.
TODAY’S GUIDANCE: The surge to a new high for the move yesterday made wheat the clear floor leader. That situation reversed overnight based on a rally in the dollar. The sharp downturn in the dollar in recent weeks has been a prime factor behind the rally in wheat and traders in this market will be quick to sell if it appears that the dollar is ready to move higher. Other factors such as weather are a mixed bag, with the possible loss of 1 million wheat acres in North Dakota still balanced out by ample world stocks. If the dollar moves higher, harvest pressure will start to become an issue. If not, open interest may continue to increase and this could push the wheat market higher. First support is at 612 1/2 and then at 604 3/4 in the July contract. Further support is at 591. Light resistance is at yesterday’s close at 625 3/4 with the next resistance at 634 1/4.
